Reservation Wages of First and Second Generation Migrants

36 Pages Posted: 27 Dec 2010

See all articles by Amelie F. Constant

Amelie F. Constant

Princeton University; UNU-MERIT; CESifo

Annabelle Krause-Pilatus

IZA Institute of Labor Economics

Ulf Rinne

IZA Institute of Labor Economics

Klaus F. Zimmermann

Global Labor Organization (GLO); UNU-MERIT; Maastricht University, Department of Economics; Free University Berlin; University of Bonn; Centre for Economic Policy Research (CEPR); Journal of Population Economics

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Abstract

This paper analyzes the reservation wages of first and second generation migrants. Based on recently collected and rich survey data of a representative inflow sample into unemployment in Germany, we empirically test the hypothesis that reservation wages increase from first to second generation migrants. Two extensions of the basic job search model, namely an unknown wage offer distribution and different reference standards, provide theoretical justifications for this conjecture. In both extensions, changing frames of reference are identified as a channel through which the phenomenon of increasing reservation wages may arise. In as far as language skills or self-evaluated returns to characteristics reflect a person's frames of reference, we find empirical support for this mechanism to be present.

Keywords: migration, ethnic identity, ethnosizer, Germany, unemployment, job search, reservation wages

JEL Classification: F22, J15, J61, J64

Suggested Citation

Constant, Amelie F. and Krause-Pilatus, Annabelle and Rinne, Ulf and Zimmermann, Klaus F., Reservation Wages of First and Second Generation Migrants. IZA Discussion Paper No. 5396, Available at SSRN: https://ssrn.com/abstract=1731200

Amelie F. Constant (Contact Author)

Princeton University ( email )

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Annabelle Krause-Pilatus

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Ulf Rinne

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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Klaus F. Zimmermann

Global Labor Organization (GLO) ( email )

Bonn
Germany

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UNU-MERIT ( email )

Keizer Karelplein 19
Maastricht, 6211TC
Netherlands

Maastricht University, Department of Economics ( email )

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Netherlands

University of Bonn

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Bonn, D-53012
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Journal of Population Economics

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